(RTTNews) - German business confidence rose for the seventh consecutive month in October to reach a thirteen-month high, underlining the fact that recovery is steadily progressing in the biggest-Eurozone economy.

The business climate index rose to 91.9 in October from 91.3 in September, the Munich-based Ifo Institute for Economic Research said Friday, while economists had forecast a reading of 92. That was the highest reading since September last year.

The current assessment index of the survey climbed to 87.3 from 87.1 and the expectations index jumped to 96.8 from 95.7. These two indexes were forecast to rise to 88 and 96.2, respectively. The expectations index logged the highest reading since May 2008.

“Today’s Ifo gives hope that the economy can take some of the current momentum into the next quarter,” Carsten Brzeski, Senior Economist at ING said. “The fundamentals of the German economy remain healthy: no internal imbalances like an overheated real estate market, strong pent-up demand for consumption and private investments and a highly competitive export sector.”

In the manufacturing sector, business climate was not quite as poor as it was in the previous month, while it continued to improve in the wholesale sector. Business climate remained largely unchanged in the construction sector, while it worsened in the retail industry.

Manufacturers assessed current business conditions unfavorable, though there were some improvements. Wholesalers reported clearly improved business conditions in comparison to the previous month. Retailers were more dissatisfied with their current business situation, as were constructors.

With regard to the six-month business outlook, manufacturers were more confident than in September. Despite the appreciation of the euro, the firms see improved export opportunities and they are utilizing their production capacities at a slightly higher pace than in the summer, Ifo said.

Firms are planning to slow down the pace of staff reductions somewhat. Wholesalers have raised outlook, but retailers are more skeptical. Firms in the construction sector have given more favorable assessments than in the previous month.

“The business climate index is unlikely to surprise positively in the months ahead,” Commerzbank Chief Economist J�rg Kr�mer said. According to the economist, the far forward-looking expectations component of the Ifo business climate has already approached its past highs, and in the coming months, the Ifo business climate should profit only from current assessments increasing.

Also on Friday, data released by the Markit Economics showed that output levels in the German private sector economy continued to expand in October, led by the strongest rise in manufacturing production for seventeen months. The flash manufacturing purchasing managers’ index stood at 51.1 in October, 49.6 in September, a sixteen-month high.

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Posted in Categories: Economy, Eurozone, Forex, Releases.

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